With many older neighborhoods experiencing revitalization, an older home might be a smart investment. So, whether you’re a first-time buyer or looking to flip a house for cash, an older home in an established neighborhood might be perfect for you. Before heading out on your home search, you may want to consider, Do you want to buy an Older House? Here are some things to think about when comparing an older home to a new house.
Location, Location, Location
Urban neighborhoods with older houses often provide easier access to public transportation and easy access to shopping, schools, places of worship and local businesses. Most older neighborhoods have sidewalks, mature trees, and loads of character and charm. Some even have rear alleys, which allow moving driveway and garage access to the rear, and making front yards, sidewalks and boulevards safer for children. With higher costs of land at the time of development, and older property may have more outside space than newer developments with a smaller concrete bound patios and a larger common areas which are not as convenient as walking out your patio door to your own yard. New construction may also tend to be further from shopping and downtown workplaces, and often cannot access buses or trains.
There are two types of tax savings you might find in an older neighborhood. The first is a tax beak or tax abatement. Sometimes a municipality uses tax breaks and abatements as an incentive to buyers to move into the neighborhood and to help revitalize an older neighborhood with new life where empty houses and vacant lots can lead to crime and blight.
Another tax break is freedom from new-construction taxes imposed on new developments to pay for infrastructure such as water and sewer lines, roads and drainage and schools along with other municipal costs.
Property taxes on older homes may seem higher upon first perusal, but taxes on older homes have less chance of massive increases than a newly constructed home. Typically, you pay property taxes in arrears, so you pay on the property assessment from the previous year. Unless you make massive changes to the property such as adding an addition or a second story, your tax rate should remain relatively stable year to year, only rising with a new levy. In new construction, the first year’s taxes may be based on undeveloped land, but at the second year, the full taxation for the house and developed property will kick in and could raise taxes four-fold or more. And don’t forget to inquire about Mello Roos tax on newer developments. This additional tax on newer communities can be substantial.
While not specifically a tax issue, consider carefully your thoughts about owning and living in a home that participates in a Home Owners Association (HOA). Association dues, fees and restrictions is a serious consideration not only for your family’s lifestyle but also for the progress of your Lender approval. You wouldn’t want to be all agreed and excited to buy your home, only to have the purchase fall out of escrow because of a problem with the HOA. Many home buyers consider it worthwhile to take the time to search an upgraded older home that does not participate in an HOA. If you do accept a home in an HOA, try to get the HOA disclosures and CC&Rs (Covenants, Conditions and Restrictions) as soon as possible for your review and for your Lender to approve.
Many older houses have the charm of certain eras of construction: Craftsman, Cape Cod, Colonial, Victorian, Tudor or Cottage-style homes often populate very old neighborhoods, while other neighborhoods may sport traditional ranch homes, or “contemporary” styles built in the 1950s through 1970s. If these styles appeal to your personal esthetic, you’ll find an older neighborhood may suit you well. Older homes, ranch-style homes in particular, lend themselves well to additions and upgrades. In addition, in older communities you may find differing styles of homes in the same neighborhood, offering a unique eclectic vibe.
New construction, conversely, typically adopts one style (French Country, brick traditional, etc.) with variations on the same theme. While this give a new neighborhood continuity, it doesn’t offer much individuality.
So, if an older neighborhood appeals to you, we can help you find just the right one for you. Give us a call and we’ll get started.